There's "an uptick in cyber security & cyber threats" with remote work: Okta Co-Founder

Okta Co-Founder & COO Frederic Kerrest joins Yahoo Finance’s Zack Guzman and Brian Cheung to discuss the outlook on cyber security as more people turn to working at home amid the coronavirus outbreak.

Video Transcript

ZACK GUZMAN: And as more and more people work from home, we are seeing a trend among the cybersecurity names out there. They've been able to buck the trend. And some of them are actually up year-to-date. And one of those is Okta, the cyber security company up by about 5% year-to-date. And right now, we're joined by the COO of Okta and Co-Founder. Frederic Kerrest joins us back on the show here. Freddy, it's good to see you again.

I just want to start with the way that your sector has been able to outperform the overall market here. A lot of people have been talking about the fact that companies need to brace for more and more traffic here. That could be a time where malicious actors try and attack some of these companies as their networks are stressed. So what were you seeing? I know you guys reported and beat estimates last quarter. But what are you seeing now, as we've kind of moved into this crisis time period here, as more and more companies trying to fend potential attacks out there?

FREDERIC KERREST: Yeah, hi, Zack, thanks for having me back on the show. It's great to be here. I think one of the big things that you're just seeing across the board, right, is, as shelter-in-place happens around the world, as people have to figure out how they're going to work remotely, both with their employees, also with customer facing, they're just trying to figure out the new realities. And those realities involve, obviously, folks who are working from home when they can.

They're using different kinds of technologies. They're using different kinds of operating systems. They're using all those applications that are trying to do that in a secure way. You also have seen, obviously, an uptick in cybersecurity and cyber threats as everyone starts moving to this work-from-home, whether it's temporary or whatever the case may be.

I saw some stat recently. I think 36% of the CNBC Tech Business Alliance Group said that they were seeing more and more cyber attacks that were happening in their environments and their populations. And so, it makes sense, right-- just phishing attacks, all the basic things that are happening. And I think you just-- you see this trend happening, and you know, it's something that everyone has to deal with in a new reality.

ZACK GUZMAN: You know, we had the CEO of CrowdStrike on the show on Friday. And he was arguing-- I mean, that's another stock that's up about 20% year-to-date. No cybersecurity, and he's bucking the trend. But he was talking about the metaphor-- extending Maslow's hierarchy of needs to companies. And he was saying that cybersecurity is as important to humans as shelter is. I mean, I'm not sure if I completely buy the idea that cybersecurity would be 100% recession-proof. But what do you see, in terms of the way that you've weathered storms in the past with the way that companies do look at cybersecurity as a need in good times and in bad?

FREDERIC KERREST: Yeah, I'm going to have to agree with you. I think that's a little bit radical. I think certainly, safe and health-- safety and health have to come first and foremost. And that's got to be the number one focus. I do think that you're starting to have these distributed systems. And if you think about-- you know, Zoom technology is a great one. Everyone's starting to work from home remotely on Zoom.

We're seeing an uptick in the Okta Integration Network of people who are adopting these kinds of technologies. So certainly, when people are starting to use their own personal computers, when they're starting to work from all sorts of resources, when they start to work on networks that might not be as secure as the ones that are used to doing in the office, you end up in this environment where we're in, where it's, you know, people have to adopt this new zero-trust approach to security-- is what everyone calls it-- which is just making sure that right folks have access to the right things at the right time in the right place.

That is a new set of technologies. Certainly, crowd sites are going to benefit from that. But I think that as people start to modernize more and more of their technology, more of their infrastructure, you're going to see that spread out across technology. And I think that's why a lot of modern enterprise software technologies that are in this cloud world seem to be doing all right so far, because they're helping a lot of their customers be successful in this new environment.

BRIAN CHEUNG: Hey, it's Brian here. I'm wondering if you could look into your crystal ball here and kind of give us an idea of what the post-coronavirus world is going to look like. It seems like with a lot of people working from home, after this is even over, some people might say, well, I still have the infrastructure to continue working from home, because it seems like it did pretty well, and that the security was at least hopefully intact during that time period. Is that a trend that you expect? Have you started to look into that and say, hey, maybe there are new business opportunities from my angle that I can use to capitalize off of that trend?

FREDERIC KERREST: Yeah, I mean, certainly, there is-- so the answer is yes. I do think you're going to see more and more that. We have had-- for example, at Okta for a number of years now, we've had every Thursday, developers are working from home. It's no-meeting Thursday. It allows them to do a lot more productive, especially when they're checking coding in on Friday. We're an agile software development company, so we do a lot on a weekly basis. Certainly for us, that's the case.

We do see, obviously, a lot more people that are shifting very quickly to a work-from-home. Everyone's shelter-in-place-- they can't go to the office. They're told to stay home. Social distancing, all the rest of it-- businesses still have to operate as best as they can. So we have seen a lot of demand for that. Basic packages we've put out in Okta for secure remote workers, where they can very quickly start to use our technologies and do that very simply.

But I do think you are going to see-- there's a burst right now, where people are trying to figure it out in real time and say, hey, how are we going to make this all work? How am I going to make sure that my employees are still productive? But I think over time, this is going to become-- I'm not sure about the new norm. But I do think you're going to see more and more of this trend as networks at home become very good, as the wireless networks that we're on are just as strong as wireless networks when you're inside offices, as laptops, as iPads, become very powerful machines.

As people move to all these cloud solutions, it's very, very easy to start to do that from anywhere. So I think once people get adjusted to that, they get adjusted to working from home on video conference and all these kinds of things. I think you might see more and more of this when we come out of it.

ZACK GUZMAN: Yeah, to follow up on Brian's question there, just in the short-term, I wouldn't expect this to kind of be one of those windows, where if you invest now and have your sales team really working to acquire new customers here, that would pay dividends down the road if they stick with your services. So how are you looking at it as a COO of a cybersecurity company to boost that, because when we were talking a CrowdStrike, it sounded like it was tough even on their sales team to connect with some of these companies as they work from home-- maintain their relationships with clients. So what are you looking at on a numbers perspective, whether or not it's worse to maybe take a bigger hit here in the short-term for it to pay off long-term?

FREDERIC KERREST: Yes, certainly. Well, I think there's a number of different things. First of all, we operate in this modern environment where a lot of our small-medium customers-- we always do low-touch anyway. So it's all over the phone. It's been over video conference in a lot of cases. I think when you get into the larger enterprise, they are used to a little more touch. We are finding new ways in which how we can do proof of concepts, demos-- all those kinds of things-- online.

It is seeming to work very well. We have kept the entire team intact, which is a very big focus for us. I know there've been all sorts of layoffs that are starting to happen in different groups, different companies, different industries, different sectors. We're very focused on keeping our team intact, which I think is going to play out very well.

But look. Over time, you know, we have to manage for this month, this quarter, next quarter, next year. Obviously, this is a public company. Over time, if you look at the long run, I think we're on the right side of history. I think people are going to go to more and more cloud technologies. They're going to be looking for more of these platform-agnostic operating systems, where you don't have a specific set of applications that you're trying to push, which is what we're focused on.

At the same time, it is in reality. So there's going to be new kinds of marketing, right? We just churned our Oktane customer event, which is typically a very big, public event for us-- we expect about 6,000 people at Moscone this week. We've changed that to an entirely online virtual event. Now, we have over 12,000 people that are registered-- so double the registration, because people are at home, and now, they can get all the content for free online, right-- at oktane20.com.

So you have to change your kind of marketing events like that. Obviously, you have to look at cash. So if you're a cash flow positive and you can operate in that way, you really want to maintain cash in this world and not have to go back to the financial markets-- especially you guys spend a lot of time on this show talking about all the variations there, not just for public companies but private companies as well.

I think we're going to see that flow through. And then finally, you just have to be a little more agile in your teams and how they manage their pipelines and how you think about the business. And then, at the end of the day, we want to make sure we're doing the right things for customers, right? They're in tough situations. I mean, managing these large companies in these new environments-- just making sure we can give them the resources to be successful is something we're super focused on. And I think hopefully, those relationships will pay out in the long run.

ZACK GUZMAN: All right, there you go. Freddy Kerrest, CEO at Okta, as well as the Co-Founder. And I would be remiss if I didn't throw in an additional plug here-- host of one of my favorite podcasts, "Zero to IPO." Check that one out as well. You guys just had Zoom.

FREDERIC KERREST: Yeah, we did. We just talked about that on Friday. I thought was timely. So Zoom just came on. That was great.

ZACK GUZMAN: [INAUDIBLE] on the tread-- sorry. Freddy Kerrest, take care. Thank you so much for joining us-- appreciate it.

FREDERIC KERREST: Thanks, Zack. Thanks, Brian-- take care. Talk to you soon.